Aurelia Butler

A vessel docked at a jetty on Louisiana’s coast is claiming its cargo of liquefied natural gas. Ice forms on a pipe as chilled fuel extracted from fields as far away as Texas or Pennsylvania is sent into the tanker’s insulated hold for shipment overseas. Cheniere Energy’s Sabine Pass export terminal is one of seven operating in the US, all of them running flat out to feed a global market desperate for energy. Europe’s goal to cut dependence on Russian natural gas in response to Moscow’s war in Ukraine should be a bonanza for LNG export companies in the US, the world’s largest gas producer. Investors in these specialist companies are bullish, as reflected in a recent all-time high for Cheniere’s stock price. But prospects for more than a dozen new American liquefaction projects remain highly uncertain as construction costs rise, the US gas price soars and climate policymakers pursue a long-term shift away from fossil fuels and their associated emissions. Even the most advanced projects will take years to feed additional supplies to the world. The US began sending out LNG from shale gas six years ago, as new supplies unleashed through fracking prompted Cheniere to build export infrastructure at Sabine Pass, originally designed to handle imports. Total US LNG capacity now stands at 120bn cubic metres (bcm) a year. Three more plants due online by 2025 will bring 70 bcm of new capacity. Another 206 bcm worth of plants have federal regulatory approval but await a final green light from their sponsors. European Commission president Ursula von der Leyen announced a deal with US president Joe Biden last month under which the EU would guarantee long-term demand for another 50 bcm a year of LNG. The volumes would offset some of the 155 bcm of gas the EU imported from Russia last year. “I think everyone felt an enormous uplift over the course of the last three to four weeks,” said Dan Brouillette, a former US energy secretary in the Trump administration and now president of Sempra Infrastructure, which has a majority stake in Louisiana’s Cameron LNG plant. European attitudes to American fossil fuels had undergone a “sea change”, he said. US LNG executives now believe that another wave of new construction may be imminent. “The future for US LNG is off the charts,” said Michael Smith, chief executive of Freeport LNG, which operates an export terminal south of Houston. “Europe recognising that they need LNG as opposed to believing that they could get out of this [energy crisis] with just renewables . . . That’s a big positive step.” Jack Fusco, chief executive of Houston-based Cheniere, said Europe’s decision to include some natural gas in its green taxonomy and its decision to wean itself from Russian energy were “positive” signs of a more “realistic view” of LNG’s role in energy security and the transition to cleaner sources. No one expects all the US’s proposed capacity to be built. LNG plants are costly and take years to pay off. Before deciding to proceed, developers typically must line up purchase agreements with customers lasting two decades or more, covering at least 80 per cent capacity. Analysts are sceptical that the EU’s guarantee or soaring global LNG prices will end up spurring as much demand as project developers hope, given other efforts to diversify away from carbon-based energy. Brussels’ “RePowerEU” energy policy statement, released last month, was directed at breaking the dependence on Russian energy but also talked of “reducing faster the use of fossil fuels” in general. US LNG advocates say their fuel is a less carbon-intensive source of electricity than coal, meaning it could help quickly reduce emissions in some countries. However, methane leaks from gas infrastructure and the full lifecycle carbon intensity of the export plants can undermine this claim.Project developers say they can add carbon capture technology to lower emissions. Freeport has installed electric drives to power its gas liquefaction process. But European utilities’ long-term appetite would still be uncertain, said analysts. “There’s a big customer out there that wants LNG, but you’re not quite sure for how long,” said Nikos Tsafos, an LNG expert at the Center for Strategic and International Studies in Washington, referring to Europe. “If anything, they’re trying to get out of the gas business altogether very quickly.” Supply chain disruptions and tight labour markets can also weigh on new capacity, developers acknowledged. The newest terminal to open, Venture Global’s Calcasieu Pass in Louisiana, came online in just 29 months, but other new projects are moving at a slower pace. Costs are rising as inflation rips through the US economy. “We’re mostly a steel project,” said Smith. “And steel [prices] have doubled in the last two years.” Projects that might have cost $500mn for every million tonnes of LNG capacity may now be closer to $1bn, suggested Smith. US natural gas prices are still a bargain compared with Europe or Asia, but they have recently soared to the highest level since 2008 to surpass $7 a million British thermal units. Strong flows to LNG export terminals are one force behind the jump. LNG supply scarcity meant “a bunch of wealthy developed economies are competing for the same small pool of LNG”, said Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. Poorer Asian countries that the global LNG industry had counted on to drive growth might rethink their LNG import plans, he said.For now, most of the US LNG that could go to Europe is already sailing there, making up about 70 per cent of exports this year. The US is not in a position to immediately replace a sudden interruption of Russian supplies, especially while the EU also tries to replenish its storage for next winter. “I wish I had better news for Europe but it’s going to take . . . at least five-plus years to get anything of size done,” said Fusco.Additional reporting by Amanda Chu in Washington More

SINGAPORE (Reuters) – The yen won a brief reprieve after hitting fresh two-decade lows from Japanese policymaker comments on Monday, even as holidays confined the U.S. dollar to narrow ranges against most other currencies.The yen fell to a two-decade low of 126.795 in early Asian trading, before both Bank of Japan Governor Haruhiko Kuroda and Finance Minister Shunichi Suzuki voiced concerns and caused it to bounce as far as 126.25. But the rally proved short-lived and it was soon back around 126.57.With the Easter holiday in Australia, Hong Kong and other parts of Asia dulling trade in other currencies, the dollar remained strong and supported by a hawkish Federal Reserve while the euro was hamstrung by a lack of clarity on when rates in the euro zone would rise.At Monday’s lows, the yen was nearly 10% weaker than where it was at the beginning of March. It fell nearly 2% against the dollar last week, marking a sixth straight losing week.Win Thin, head of currency strategy at BBH Global Currency Strategy, said the dollar didn’t seem to have significant chart points halting a potential further run-up against the yen until a 2002 high near 135.15.  “We see low risk of FX intervention. Until the BOJ changes its ultra-dovish stance, the monetary policy divergence argues for continued yen weakness and intervention would likely have little lasting impact,” Thin wrote. Japanese policymakers have been vocal about their concerns around the falling yen, particularly after it slipped to the weaker side of 125 per dollar on April 11. While expectations are for the Bank of Japan to acknowledge rising inflationary pressures at the upcoming April 27-28 monetary policy review and not do more, analysts say the weak yen piles pressure on Kuroda to tweak its zero-rates, yield curve control policy soon.Kuroda made clear on Monday that while a weak yen could impact corporate profits, it was premature to debate any exit from that easy policy. Japanese Prime Minister Fumio Kishida said on Friday the central bank’s monetary policy is aimed at achieving its 2% inflation target, not at manipulating currency rates. Finance Minister Suzuki has spoken several times in the past weeks, warning that a weak yen is “bad” for Japan’s economy if rising costs of raw materials cannot be passed onto prices of goods sold.JPMorgan (NYSE:JPM) Securities analysts Benjamin Shatil and Sosuke Nakamura said the use of the word “bad” marked a change in tone. “We have long argued that the BOJ may need to blink if yen weakness is sufficient to cause political repercussions,” they wrote on Friday. “The risk to running short yen positions will be any capitulation in Kuroda’s thus-far positive assessment of yen weakness.”Meanwhile, concerns over global supply elevated oil prices further on Monday [O/R], adding to the headwinds for the energy-importing Japanese economy.HAWKISH FEDThe dollar stayed close to a two-year high versus the euro, supported by the unremitting hawkish comments from Fed officials.The euro was flat around $1.08, just off last week’s low of $1.0758, a level unseen since April 2020.The Fed last month delivered the first in what is expected to be a series of interest rate increases this year and into next to bring down 40-year high inflation. New York Fed President John Williams said on Thursday that a half-point rate rise next month was “a very reasonable option”, while Cleveland Federal Reserve Bank President Loretta Mester signalled rates should rise quickly.Last week, the European Central Bank confirmed plans to end its hallmark stimulus scheme in the third quarter, but stressed there was no clear timeframe for when ECB rates would start to rise, and that policy is flexible and can quickly change.Meanwhile, the Australian dollar hovered near its lowest in a month at $0.7383.Cryptocurrency bitcoin continued to straddle the $40,000 mark, last changing hands at $39,748. More

TOKYO (Reuters) – Bank Of Japan Governor Haruhiko Kuroda said on Monday that the recent sharp weakening in the yen could impact on Japanese firms’ earnings plans.It is desirable that currencies move stably reflecting economic fundamentals, Kuroda told a parliament session. More

COLOMBO (Reuters) – Sri Lanka’s worst economic crisis has triggered an unprecedented wave of spontaneous protests as the island nation of 22 million people struggles with prolonged power cuts and a shortage of essentials, including fuel and medicines.President Gotabaya Rajapaksa’s government has come under growing pressure for its mishandling of the economy, and the country has suspended foreign debt payments in an effort to preserve its paltry foreign exchange reserves.On Monday, Sri Lanka will begin talks with the International Monetary Fund (IMF) for a loan programme, even as it seeks help from other countries, including neighbouring India, and China.HOW DID IT GET TO THIS?Economic mismanagement by successive governments weakened Sri Lanka’s public finances, leaving its national expenditure in excess of its income, and the production of tradable goods and services at an inadequate level.The situation was exacerbated by deep tax cuts enacted by the Rajapaksa government soon after it took office in 2019, which came just months before the COVID-19 crisis.The pandemic wiped out parts of its economy – mainly the lucrative tourism industry – while an inflexible foreign exchange rate sapped remittances from its foreign workers.Rating agencies, concerned about government finances and its inability to repay large foreign debt, downgraded Sri Lanka’s credit ratings from 2020 onwards, eventually locking the country out of international financial markets.But to keep its economy afloat, the government still leaned heavily on its foreign exchange reserves, eroding them by more than 70% in two years.By March, Sri Lanka’s reserves stood at only $1.93 billion, insufficient to even cover a month of imports, and leading to spiralling shortages of everything from diesel to some food items.J.P. Morgan analysts estimate the country’s gross debt servicing would amount to $7 billion this year, with the current account deficit coming in around $3 billion. For a related graphic on Sri Lanka’s shrinking forex reserves, click https://tmsnrt.rs/3tho32LWHAT DID THE GOVT DO?Faced with a rapidly deteriorating economic environment, the Rajapaksa government chose to wait, instead of moving quickly and seeking help from the IMF and other sources.For months, opposition leaders and experts urged the government to act, but it held its ground, hoping for tourism to bounce back and remittances to recover.Newly appointed Finance Minister Ali Sabry told Reuters in an interview earlier this month that key officials within the government and Sri Lanka’s central bank did not understand the gravity of the problem and were reluctant to have the IMF step in. Sabry, along with a new central bank governor, was brought in as part of a new team to tackle the situation. But, aware of the brewing crisis, the government did seek help from countries, including India and China. Last December, the then finance minister travelled to New Delhi to arrange $1.9 billion in credit lines and swaps from India.A month later, President Rajapaksa asked China to restructure repayments on around $3.5 billion of debt owed to Beijing, which in late 2021 also provided Sri Lanka with a $1.5 billion yuan-denominated swap. For a related graphic on Sri Lanka’s foreign debt, click https://tmsnrt.rs/33M3AIQ WHAT HAPPENS NEXT?Finance Minister Sabry will start talks with the IMF for a loan package of up to $3 billion over three years.An IMF programme, which typically mandates fiscal discipline from borrowers, is also expected to help Sri Lanka draw assistance of another $1 billion from other multilateral agencies such as the World Bank and the Asian Development Bank. In all, the country needs around $3 billion in bridge financing over the next six months to help restore supplies of essential items including fuel and medicine.India is open to providing Sri Lanka with another $2 billion to reduce the country’s dependence on China, sources have told Reuters.Sri Lanka has also sought a further $500 million credit line from India for fuel.With China, too, the government is in discussions for a $1.5 billion credit line and a syndicated loan of up to $1 billion. Besides the swap last year, Beijing also extended a $1.3 billion syndicated loan to Sri Lanka at the start of the pandemic. More

The Chartered Management Institute said many businesses were wary of offering pay rises when other costs were soaring and some feared that consumer demand would soon falter.”We’ve not really seen the full effects of the Ukraine conflict filter through yet, and it’s clear that pressure is mounting across the board and there are undoubtedly some rocky times ahead,” Anthony Painter, the CMI’s director of policy, said.Pay settlements in the private sector averaged 3.2%, compared with 2.4% in the public sector, the CMI data showed, roughly in line with other similar surveys. While bigger pay rises would help ease the cost of living squeeze being felt by most British workers, the Bank of England is concerned that hefty pay rises could make it harder to get inflation back to target.Consumer price inflation hit a 30-year high of 7.0% in March, and some economists think it could reach double digits later this year.The BoE’s own survey of employers pointed to pay settlements of almost 5% this year, far higher than the usual trend.So far there has been little sign of increases on that scale. Last month, pay data company XpertHR said the average award in the three months to the end of February was 3%, the joint-highest since 2008. Three percent was also the average pay rise that businesses planned for 2022 as a whole, the Chartered Institute of Pay and Development (CIPD) said.Average annual wage growth excluding bonuses — which unlike pay settlement data includes raises due to job moves and promotions — was 4.0% in the three months to February, according to official data published last week.The CMI survey showed only about half of firms surveyed between March 31 and April 5 had definitely decided to raise pay this year, with 48% either deciding against a raise or unsure.By contrast, the XpertHR and CIPD surveys have previously shown less than 10% of employers intended to freeze pay. More

British households have cancelled video subscriptions in record numbers as they curb non-essential spending to cope with the cost of living squeeze, reinforcing concerns that a pandemic-fuelled boom in streaming is over.Consumers walked away from about 1.5mn video on-demand accounts such as Disney Plus, Apple TV Plus and Now during the first three months of the year, according to figures from analytics group Kantar.While 58 per cent of households retain at least one streaming service, a decline of only 1.3 per cent from the end of 2021, the terminations suggest that viewers have become more discerning about subscribing to multiple platforms.A desire to save money was the most important reason for the cancellations and young adults have become particularly wary of paying for television on top of the £159 annual licence fee, the researchers found.The findings were “sobering” for streaming providers, said Dominic Sunnebo, global insight director at Kantar. He said streaming services had to prove their worth to consumers “in what has become a heavily competitive market”. Households are looking for ways to trim budgets to cope with rising bills. Surging energy, clothing and food prices pushed inflation to a 30-year high in March, data from the Office for National Statistics showed last week.Media investors have become increasingly concerned that the rapid worldwide growth of video streaming — encouraged by demand for home entertainment during the pandemic — has peaked.Shares in Netflix, which is due to release first-quarter earnings on Tuesday, have dropped 43 per cent so far this year as global subscriber numbers have disappointed.Consumers are re-evaluating subscriptions in response to higher charges. Several providers have raised prices in markets including the UK, in part to compensate for rising costs of labour and facilities that have made TV and film production more expensive.Among them is Netflix, which recently implemented its second round of UK price increases within 18 months, raising standard monthly subscriptions from £10 to £11.At the same time, options for British viewers have continued to widen. Recently introduced offerings include Peacock from Sky, which features content from NBCUniversal. Viaplay, the Scandinavian streamer, is planning to launch in the UK this year.Many consumers are still signing up for streaming services. Kantar’s research, which was based on interviews with 14,500 people, found that about 3 per cent of British households took out a subscription during the first quarter.However, this was a marked slowdown from the 4.2 per cent that did so in the same period a year ago.Cancellations, meanwhile, accelerated, from 1.2mn a year ago and from 1.04mn during the final three months of 2021.After budgetary concerns, the most frequently cited reasons given by those who terminated their subscriptions were that they did not use them often enough and that the platforms lacked new shows they wanted to watch.The net effect was for the number of households with at least one paid subscription to decline by 215,000 compared with the previous quarter, to 16.9mn.

Britbox, Apple TV Plus and Discovery Plus had the highest churn rate — meaning they lost the most users on a gross basis.Disney Plus had the biggest increase in its churn rate, Kantar said. Its quarterly churn tripled from the previous quarter to 12 per cent.Netflix and Amazon’s Prime Video had the lowest churn rates in the quarter. Kantar said this was a sign they were “the last to go when households are forced to prioritise”. More